Results

• Within Expectations: Matrix’s FY14 reported PATAMI of RM182.6m came in above expectations, accounting for 111.6% and 110.0% of ours and consensus’ full year earnings, respectively.

Deviations

• Wider-than-expected margins from latest development properties launched.

Dividends

• Declared forth interim dividend of 5.25 sen/share as well as a special dividend of 1.25 sen/share, totalling FY14 dividend to 17.3 sen/share. This represents payout and yield of 35.4% and 6.0%, respectively.

Highlights

• Yoy: Revenue and PATAMI continued to record healthy growth on the back of higher sales in higher margins’ residential and commercial property developments.
• Qoq: Revenue grew marginally by 1.5% from the group’s recognition of land sale. In addition, the improved margins fetched by its recently launched development properties have resulted the group’s PATAMI to grew further by 25.4% qoq.
• Matrix highlighted that it launched Hijayu 3A (phase 4) in 4QFY14 and targets to launch Hijayu 2 (Phase 1), Sendayan Merchant Square Shop Offices (Phase 1) and d’Tempat Country Club in 1QFY15. Matrix International School and matrix Private School has started operations in Sept 2014 and Jan 2015 respectively.
• We gathered that total new sales for FY14 was RM630.2m, of which RM208.7m were done in 4QFY14 (quarterly sales illustrated in Figure 4).
• As at FY14, the group’s total unbilled sales stands at RM429.3m, representing 0.95x of FY14’s property development revenue.

Forecasts

• FY15-16 forecasts are raised slightly by 3-4% on the back of better margins on the group’s latest launched developments (Hijayu 3A in Bandar Sri Sendayan).

Rating

BUY

Positives

• 1) Further upside from escalating landprices in Seremban as more Greater KL residents continue to migrate to Seremban; (2) Optimism on its land replenishment for STV 3; (3) Undemanding FY15E P/E of 7.9x vs. more than 12-19x for mid to large-cap developers; and (4) Still attractive FY15E DY of 5.6%, based on 40% payout ratio.

Negatives

• (1) Lack of landbank diversification meansthe company’s fate is completely tied to that of Seremban.

Valuation

• On the back of favourable results, our TP is raised slightly to RM3.30 (previously RM3.27), based on unchanged 30% discount to RNAV. This implies FY15E P/E of 7.9x, remains undemanding vs. 12-18x for mid to large-cap peers. Maintain BUY.

Source: Hong Leong Investment Bank Research - 13 Feb 2015